All You Need To Know About Mediation But Didn't Know To Ask-A Parachute for Parties in Litigation!

A recently completed high-rise office building leaks when it rains at the roof, walls, windows and decks. The estimated cost of repair exceeds several million dollars. You're the developer seeking to recover those costs. (You may be the general contractor or architectural firm to whom the developer is looking for recovery. Or, you may be one of the two dozen subcontractors and vendors who worked on the project who everyone else is blaming for the leaks.) You have learned that if this claim can be resolved out of court, you could avoid the time and cost of deposing witnesses, preparing for trial, and trial. Depositions, including an army of experts would take 115 days. Preparation for trial and the trial itself would take another 120 days. It would cost close to two million dollars in attorneys fees, expert witness fees and other expenses to recover the several million dollars in repair costs. This dispute clearly has the potential of becoming a living nightmare.

Parties to lawsuits often do not understand the litigation process or what is involved in going through trial until too much money and emotion have been spent. Only after parties have experienced the financial and emotional drain and pain of taking depositions, written discovery, and costly motions in court on every conceivable subject and ground, do the parties realize that the trial has not even begun and there is a long road ahead.

Though parties begin litigation with the expectation of winning, rarely is a case a 'slam dunk' winner. Even "slam dunk winners" have downside risks for both plaintiff and defendant, getting to the point of judgement will likely be extremely expensive in terms of cash outlay, and impact upon the party's emotional, personal and business life. Many difficult and painful questions arise: How much is trial going to cost? What are my realistic chances of success? How do I stop my stomach from churning?
Eventually, it dawns on almost every party that it would be nice to settle the dispute before trial.
Since 95% of all lawsuits settle before trial, how does one resolve the dispute sooner than later?

Alternatives to Litigation and Trial
Alternatives to litigation and trial are referred to as Alternative Dispute Resolution, or ADR, and include arbitration, court settlement conferences and mediation, among others.

Mediation is a process in which a neutral, called a mediator, assists the parties in exploring issues in the case. The mediator facilitates discussion between counsel and parties, and guides the parties toward finding their own solutions to the dispute. In traditional mediation the mediator does not make a decision, a court reporter is not present, and there are no rules of evidence which control the process, with the exception of a rule concerning confidentiality.

Mediation is confidential. Everything which is discussed during the mediation, and any documents prepared especially for the mediation cannot be used by any party outside of the mediation process, or in any portion of the litigation or trial. The purpose of confidentiality is to provide a setting in which the parties and attorneys can discuss the facts and issues openly, without fear that what has been said may be used against them outside of the mediation. The ability to speak openly leads to solutions and settlement.

Traditional Mediation
There are many forms of mediation. The most commonly used form is traditional mediation. This process has several distinct phases. In the first phase, the joint session, all parties, attorneys and the mediator are present. The parties may choose to have additional persons present, such as experts or psychologists. The attorneys present their client's view of the facts and a discussion of the law which is applicable. It is critical for the parties to personally tell their stories and be heard by the opposing party and attorney.

If the parties listen carefully, they are likely to learn that the opposition's perceptions are starkly different from their own. Becoming aware of these major differences in perceptions of the events which led to the dispute is extremely beneficial. When the parties carefully consider their different positions on important issues, they can begin to understand how difficult it will be for a judge or jury to make a decision. Which party is right? Which party is telling the truth? What proof does each party have to support its claims?

What Role Do the Parties Play in the Mediation?
Each participant in the mediation has a critical role. In fact, if each participant does not play the role the way it needs to be played, the mediation may fail.
A party to a dispute or lawsuit needs to participate fully in the mediation process, preferably even before the mediation begins. Each party benefits by helping plan the mediation process, and each needs to help his attorney prepare for the mediation. A party needs to listen very carefully to what the opposing attorney says in her opening statement. This is a preview of what the judge or jury will hear during trial. Listen carefully.

Who Must be Present at the Mediation?
Each party must have a person present who can make a binding decision on behalf of that party. If the party is an individual, he or she must be present. If the party is a corporation, there must be an officer present who can bind the corporation. If the party is a governmental agency, all persons from the agency who are necessary to make a recommendation to the governmental board must be present. If an insurance company is involved, a representative with sufficient authority to make a decision on behalf of the insurance company must be present. Why go to all this trouble of making sure that each party is present and represented by someone who can make a binding decision? The dispute will very likely not settle otherwise.

In some cases parties may wish to have their technical experts at the mediation. When all parties have their experts present, this allows the opportunity to learn more than they would from days of costly experts depositions.

In some disputes emotional issues are a major, if not controlling, component. Unless the emotional issues are addressed during the joint session and explored during the caucus sessions, the dispute may not settle. Insurance bad faith, wrongful discharge, sexual harassment, and discrimination disputes are usually very highly emotionally charged. In these disputes it may be very helpful for a party to have his or her psychologist present. For example, in a recent wrongful discharge/malicious prosecution case (without getting too technical, you can assume this type of case is very nasty), during pre-mediation discussions with counsel, I suggested to plaintiff's attorney that the plaintiff bring her psychologist to the mediation for support. When it came time for the plaintiff to tell her story, she absolutely froze. We adjourned the joint session so I could caucus with the plaintiff, her psychologist and attorney, where she was encouraged to share her story and feelings. When the joint session resumed, though the plaintiff spoke only briefly, she felt she was heard by the defendant. The defendant spoke openly, though briefly, as well. The case settled, and I attribute the settlement to the honest and open, though brief, discussion between the employee and ex-employer.

Preparing for Mediation
Several days before the mediation begins the attorneys exchange mediation statements. Unlike briefs -- which are never brief -- mediation statements are summaries of the factual claims and legal arguments. After the mediation statements have been exchanged, the parties and their attorneys will discuss the often glaring strengths in the opposition's position and the weaknesses in their own position. These are risk factors. Each party needs to discuss the risk factors very thoroughly with their attorney and understand them before the mediation begins. This is a good time to begin seriously considering solutions, both monetary and non-monetary, and how far one can stretch to settle the dispute. Do not wait until the mediation to start thinking about these critical points. Be creative.

What Are the Costs of Mediation Compared to Trial?
Mediation may take several hours, a day, or longer. The length of the mediation depends on the number of parties, the complexity of issues, and how well prepared the parties and their attorneys are. More importantly, the length of the mediation is dependent on how flexible the parties are, and how compelling their desire to resolve the dispute. The cost of mediation is economical compared to the alternatives of trial and what leads up to it. Just one pre-trial motion by the attorney may cost more than mediation. Trial is infinitely more expensive, financially and emotionally, and is much riskier than mediation.

What is the Best Timing for Mediation?
Timing is critical in mediation. The best timing for mediation is as early in the dispute as possible after the parties and attorneys have a very good handle on all of the factual and legal issues. Preferably the mediation should take place before expensive discovery, such as depositions, which can become very costly.

Enlightened judges and mediators take the view that once depositions have begun the parties have already lost. Why?
By that time, after investing a lot of money in the litigation process, parties will have become less flexible and more entrenched in their positions. In fact, as the attorneys become more prepared for trial, the more difficult it is to settle the dispute. If mediation is attempted at this late time, parties ask for recovery of their attorneys fees. The reality is, however, in a negotiated settlement, whether through mediation or otherwise, each party usually pays their own attorney's fees. In addition, parties and attorneys begin to believe that theirs is the only possible "correct", or even "righteous" position. Sometimes parties and their attorneys believe that they therefore have nothing to lose by going to trial. This is an unfortunately common and expensive exercise in self-deception. A party can always lose. In trial one party always loses. In multi-party cases, several parties lose. In a successful mediation no one loses.

How Much Time Should You Allow for the Mediation?
Mediation requires patience. It takes time to work through each phase. If the mediation is rushed, parties will feel they have not had an opportunity to be heard. This may cause the mediation to fail. Sometimes it may seem mediation moves slowly. However, as the parties invest more time and energy into the problem solving process, it gains momentum and leads to settlement.
It takes time for the parties and counsel to work through the process and for the mediator to learn all the important facts and legal positions. This becomes an investment by everyone so that they cannot easily walk away from the mediation without saying they have failed.

How Do I Get the Opposition to Mediation?
Easy. Have your attorney contact the appropriate mediator who will discuss the possibility of mediation with the opposing attorney. Not only do mediators help parties settle disputes, they can get the parties to the negotiating table.

Documenting the Agreements
Once settlement of the dispute is reached, it should be documented immediately and signed by all parties and counsel. Nail it down! If this is not done, there is a risk that the parties will change their minds. Drafting the settlement agreement with the mediator present immediately resolves disputes in language which could otherwise take weeks to resolve.

The Need for Closure and Commitment
So many disputes are fueled by emotion, anger, pain and the desire for "justice". The closest most parties will come to justice is through settlement on terms that they help achieve. Justice will likely not be attained in trial because there is an enormous risk the judge or jury may not see the facts with the same passion or emotion as the party. Therein lies the need for closure, at a point in time the parties can control. Closure in litigation means bringing an end to the grief, constantly churning stomach and great outflow of money which fuels the engines of war. Seize the opportunity!

The mere desire to settle a dispute is not enough. A successful mediation is like a successful relationship, it requires commitment. If all parties and counsel commit to resolving the dispute, there will be a settlement. Mediation is a living process which evolves as a result of the parties' participation in it. When all the ingredients are present, it works phenomenally well.

Comments

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